USPS Overstated Savings of Workforce Shift While Turnover Increased

GAO could not substantiate about $1.7 billion of the $9.7 billion in savings that USPS claimed for the 2016-2018 period.

The Postal Service over-stated savings from shifting to lower-paid and less tenured employees and reducing services, and did not account for some side effects such as increased turnover, the GAO has said.

GAO said that it was able to substantiate about $8 billion of the $9.7 billion in savings that USPS has claimed for the 2016-2018 period. It said the agency’s own estimates “are likely overstated because they do not fully account for changes in work hours or tenure of employees. Also, USPS did not account for other costs such as increased turnover rates among lower-paid employees.”

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“USPS lacks guidance on what factors to consider in its cost savings estimates, and as a result may make future changes to employee compensation based on incomplete information . . . saving depends on USPS overcoming challenges, such as potential increases in turnover and reduced productivity resulting from decreases in pay and benefits,” it said.

USPS and union officials told GAO that “the unpredictable non-career employee work schedules, as well as low unemployment rates, have created additional challenges for recruiting qualified non-career employees” resulting in increased recruitment costs. Meanwhile, turnover among non-career employees “was higher than expected” resulting in added costs for both recruitment and training of new employees.

It added that there is potential for savings from further service reductions, for example in delivery frequency, but the reductions already made “have not fully achieved planned work hour reductions due to, among other things, issues with management of work hours and lack of union agreement.

The report follows a similar recent one by the Postal Service IG that documented a decrease in labor costs over the last decade due to a decrease in overall employment — which has since leveled off — and the shift of tens of thousands of positions from career status to lower-paid non-career status.